US mkts hit 4-month low, Nasdaq closes 2.1% down

Stocks hit a four-month low on Thursday as rising Spanish bond yields increased investor anxiety over that country's banks and another round of weak data undermined hopes for US economic recovery.

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US mkts hit 4-month low, Nasdaq closes 2.1% down

Stocks hit a four-month low on Thursday as rising Spanish bond yields increased investor anxiety over that country's banks and another round of weak data undermined hopes for US economic recovery.

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Stocks hit a four-month low on Thursday as rising Spanish bond yields increased investor anxiety over that country's banks and another round of weak data undermined hopes for US economic recovery.

Growing worries over developments in the euro zone and lackluster economic data pushed the S&P's losing streak to five consecutive days. The index, which closed at a level not seen since mid-January, has now relinquished more than half of its gains from the first quarter.

"There is not a lot of interest in the equity market," said Jason Weisberg, managing director at Seaport Securities Corp in New York. "The overhang with Europe is so heavy, people are tired of playing whack-a-mole, and their portfolios are the mole."

The Dow Jones Industrial Average dropped 156.06 points, or 1.24%, to 12,442.49. The Standard & Poor's 500 Index fell 19.94 points, or 1.51%, to 1,304.86. The Nasdaq Composite Index lost 60.35 points, or 2.10%, to 2,813.69.

Caterpillar Inc dropped 4.5% to USD 87.77 as the biggest drag on the Dow after the heavy equipment company's dealers reported slowing sales for April. The Dow declined for an eleventh session in the past 12.

A gauge of future US economic activity fell in April for the first time in seven months, and the Philadelphia Federal Reserve's index of business conditions hit its lowest since September.

In addition, the weekly claims for jobless benefits showed no improvement, a sign the pace of hiring remains lackluster.

Spain's El Mundo newspaper reported that customers at troubled Spanish lender Bankia had withdrawn more than 1 billion euros over the past week, a report which the Spanish government denied.

Adding to concerns about the region, Spain's borrowing costs shot up at a bond auction. Bankia shares fell 14% in European trading after sliding as much as 30% earlier.

News that some Greek banks face emergency funding needs hurt sentiment and caused a further decline in risk assets, which have dropped over recent weeks. The CBOE Volatility Index .VIX jumped 9.3% and hit its highest level since mid-December.

"Everyone is inclined to sell into rallies rather than buy into dips, find any excuse to sell," said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.

Facebook Inc priced its initial public offering at USD 38 per share, giving the world's No. 1 online social network a USD 104 billion valuation in the third largest offering in US history. The stock begins trading on Friday on the Nasdaq.

The Nasdaq fell on weakness in tech shares. Apple Inc lost 2.9% to USD 530.12 and Qualcomm Inc fell 3.3% to USD 57.16.

Dollar Tree fell 6.1% to USD 95.13 and was one of the biggest percentage decliners on the Nasdaq 100 .NDX after giving a second-quarter profit outlook that was below expectations.

The S&P has fallen 6.1% so far in May, and while volatility is expected to continue, the persistence of the losses have some analysts forecasting a near-term rebound.